Strategic Autonomy in Post-Covid Trade Policy: How Far Should We Politicise Supply Chains?
The resilience of supply chain (SC) is a key nexus in the debate over the European Union’s strategic autonomy that continues to divide member states. To reduce critical dependencies on external supply, both diversification of supply and the reshoring of production have their limits. Moreover, the growing rivalry between the United States and China calls for the development of a systemic approach to SCs’ resilience that takes into account all levels of subcontracting beyond the first tier of supply. This calls for going beyond the traditional positioning of EU member states in favour of free market or public intervention, to work on a close coordination of an industrial policy that relies on a stronger attractiveness of the Single Market and a trade policy that aims less at protecting strategic industries from foreign competition than at applying precautionary measures that protect populations from supply shortages.
Paper prepared in the framework of the project "Politiche e strumenti per promuovere l’autonomia strategica dell’Ue nei settori della difesa, del commercio internazionale e dell’allargamento". A previous version has been presented on 25 June 2021 during the webinar “EU Strategic Autonomy and Trade Policy in a Post-Covid World”.
1. Resilience of SCs as a structural challenge for strategic autonomy
2. Dependency on foreign supply: Current state of play
2.1 The regionalisation of foreign sourcing
2.2 A complex mapping of dependencies on imports
2.3 The stress test of the pandemic reveals good resilience of GSCs
3. Relocalisation of production: The limits of diversification and reshoring
3.1 The challenge of diversification
3.2 The limited contribution of reshoring to resilience
4. Towards a systemic approach to SC resilience
4.1 The siren song of SC sovereignty
4.2 Priorities for the EU to help business increase resilience of SCs